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Bank Mortgage Lending Falls By Nearly £40bn

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http://www.telegraph.co.uk/finance/persona...early-40bn.html

British banks dramatically scaled back new mortgage lending in the first half of the year, issuing little more than half the sum they lent in the same period a year earlier.

They also and demanded substantially higher deposits from borrowers in a climate of high caution.

An analysis of interim banking results carried out by The Sunday Telegraph reveals that gross mortgage lending by the high street banks totalled just £50.25bn in the six months to June, down from more than £90bn in the same period a year earlier.

Every bank but the taxpayer-backed Royal Bank of Scotland cut average loan-to-value ratios − the amount lent as proportion of the value of the mortgaged properties − to less than 60pc.

Net mortgage lending, which also accounts for repayments and redemptions by borrowers, also tumbled despite the Government's attempts to strong-arm the banks into feeding significantly more credit into the housing market.

Combined net mortgage lending by RBS and Lloyds Banking Group, 70pc and 43pc owned by the taxpayer respectively, was just £5.1bn in the first half, down from £16.24bn for the same period last year. The two banks have committed to net mortgage lending of £12bn throughout this year in return for tapping the Government's insurance scheme for toxic assets.

Barclays' gross mortgage lending more than halved in the first half, to £6bn, as its net lending tumbled from £7.1bn to £2.2bn.

HSBC, meanwhile, increased gross lending and doubled its share of the market in the first half, despite cutting loan-to-value ratios from almost 60pc to 50pc.

better buy now then :wacko:

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I hope I have missed the sarcasm in this post.......

Why buy when the banks are figuring in 30+% falls.

(if I have, I blame red wine and your ambiguous smiley, Athom!) ;)

damn it man that smiley is the most crazy arsed one on here what can i do. I'll have to start bringing my own images of insanity

crazy_harry.jpg

Edited by athom

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Net mortgage lending, which also accounts for repayments and redemptions by borrowers, also tumbled despite the Government's attempts to strong-arm the banks into feeding significantly more credit into the housing market.

11bn1a9.gif

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HSBC, meanwhile, increased gross lending and doubled its share of the market in the first half, despite cutting loan-to-value ratios from almost 60pc to 50pc.

Now i wonder how many people would have even imagine that scenario back in 2007. incredible really.

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So lending has halved, yet house prices have recently started to rise (and may show a rise for the whole year, according to Nationplied). If lending levels were to go back to what they were 12 months ago, then just think how great it would be for property prices ! ;)

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HSBC, meanwhile, increased gross lending and doubled its share of the market in the first half, despite cutting loan-to-value ratios from almost 60pc to 50pc.

The rationing gets even tougher. I said LTV would be used to ration loans, when you factor in what this means people having to save and not spend FTB are going to disappear from the market, volumes are going to be low for a long time.

Banks can make all the claims they like when they have the limiting factor of LTV.

Bad news for the taxman on so many levels.

from here:

If your on £17000 a year 3.5x salary gives you a maximum amount of £59500

If your on£16000 a year 3.5x salary gives you a maximum amount of £56000

If your on £15000 a year 3.5x salary gives you a maximum amount of £52500

If your on £13000 a year 3.5x salary gives you a maximum amount of £45500

So if most households are only going to have 1 person working these are the maximum loan amounts banks may be willing to lend to individuals.

It may also be fair to say 100% won't be returning anytime soon which means buyers need a deposit, for FTB this will mean savings. So if you where on £13k a year and 10% deposit is the minimum requirement you would need savings of around £5050 to give you a maximum of £50550 to spend on a house.

Now the larger the LTV ratio banks depend the lower prices will fall, I personally feel someone who is renting is going to struggle to save £5k, especially if they are on £13k a year. They won't have that much spare cash. I would estimate it will take them 3-5 years to save the money. Not good for a quick fix to the property market.

You have to ask yourself how much can someone on £13k save to get a deposit, yes they may be able technically get £45k mortgage but would they be able to save the 10%. If no then house prices have a long way to fall so that they become affordable for the FTB.

Either wages rise or prices drop. So if typical house was £100,000 and you have a 60% fall in prices that would give a house of £40000. Therefore you would need a deposit of £4000 if banks want 10%.

So is this affordable? Do you think FTB earning £13k a year, renting, maybe a small child etc... is going to be able to save £4000?

Are FTB buyers important to the housing market, if the answer is yes you have a bit of a problem.

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This isn't news is it? Why do the press think this is news, hasn't the CML been saying ALL year that they did not see mortgage lending exceeding £145bn this year ?

Mortgage lending 2007 - £363bn

Mortgage lending 2008 - £258bn

Forecast lending 2009 (CML) - £145bn

Yet still worth considering that the banks ARE still lending as much as they did at peak

Banks lending the same as at peak

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